Talent Solutions

How Do Hiring Agencies Work?

17 Mar 2025 0

Hiring the right talent can be a challenging and time-consuming process. Sifting through applications, conducting interviews, and managing recruitment logistics can strain your team, especially in today’s competitive job market. However, one excellent solution for businesses is to utilize the help of a hiring agency. But how do hiring agencies work, and are they really worth it?

HOW HIRING AGENCIES WORK

Hiring agencies work to aid businesses with staffing needs. They take some of the burden off of companies by sourcing candidates, vetting their skills and qualifications, and then offering the best options to the company for hire. This greatly streamlines hiring, reducing the time and effort spent on recruitment while ensuring businesses gain access to top-tier talent.

Beyond filling immediate vacancies, hiring agencies also work to help companies build a strong talent pipeline. By proactively identifying and engaging with skilled professionals, hiring agencies enable businesses to address workforce gaps efficiently and plan for future staffing needs.

Additionally, hiring agencies provide valuable market insights, helping businesses navigate salary trends, candidate expectations, and evolving hiring challenges. Their expertise ensures that companies remain competitive in attracting and retaining top talent, reducing turnover, and improving overall workforce stability.

DIFFERENCES IN HOW HIRING AGENCIES, STAFFING AGENCIES, AND EMPLOYMENT AGENCIES WORK

The terms “staffing agency,” “hiring agency,” and “employment agency” are often used interchangeably, though they can have slight differences in focus. Generally, a staffing agency specializes in providing temporary or contract workers, while a hiring agency assists businesses in recruiting for both temporary and permanent roles.

An employment agency typically focuses on helping job seekers find work, often emphasizing direct placements. However, in many cases, these terms refer to the same type of service.

STEPS FOR WORKING WITH A HIRING AGENCY

Now that you understand the basics of how hiring agencies work, you should know what to expect from the process. Partnering with a hiring agency typically follows these key steps.

1. Define Hiring Needs

The business provides details about the open position. This can include job responsibilities, required skills, salary range, and desired experience level.

2. Engage the Hiring Agency

The company partners with a hiring agency that specializes in their industry or specific staffing needs. For example, the company may seek out a specialist in IT recruitment.

3. Source and Screen Candidates

The agency leverages its network, job boards, and databases to find qualified candidates. They conduct initial screenings, verify credentials, and assess compatibility before presenting top candidates to the business.

4. Review and Interview Candidates

The company reviews the shortlisted candidates. Interviews may be conducted as needed.

5. Hire and Onboard

Once the company selects a candidate, the hiring agency assists with offer negotiations, paperwork, and onboarding processes. This ensures a smooth transition into the role.

HOW DOES A HIRING AGENCY MAKE MONEY?

Hiring agencies typically work by charging businesses based on the type of hiring arrangement. There are several common recruitment fee structures.

Contingency fees are one of the most popular models, where the agency charges a percentage of the hired employee’s first-year salary. Businesses only pay if they hire a candidate presented by the agency, making this a low-risk option for employers.

Another approach is retained search fees, which are commonly used for executive or specialized hiring. In this model, businesses pay a portion of the recruitment fee upfront to secure the agency’s exclusive services, with the remaining balance due upon successful placement.

For companies looking to fill temporary or contract positions, agencies typically charge temporary and contract staffing fees. These are billed at an hourly rate that covers the employee’s wages and taxes, as well as the agency’s fee.

Finally, for permanent hires, agencies may charge direct hire fees, which function similarly to contingency fees but are usually a one-time payment made upon the candidate’s start date.

HOW DO YOU CHOOSE A HIRING AGENCY THAT WILL WORK WELL?

The specifics of how a hiring agency works can differ substantially from case to case. Choosing the right one can boost your chances of success.

Many companies have had experiences with staffing agencies that focus on quick placements, leading to high turnover and underqualified candidates. However, a reputable and strategic hiring agency goes beyond just filling positions—it helps you find the right talent that aligns with your company’s long-term goals and workplace culture.

When evaluating a hiring agency, start by assessing its reputation and industry expertise. Look for agencies with a strong track record in your industry. These often have deeper talent pools and a better understanding of your specific hiring needs. Reviews, testimonials, and case studies from other businesses can provide insight into the agency’s success rates and client satisfaction.

Transparency and communication are key. A reliable hiring agency should keep you informed throughout the process, providing clear expectations regarding fees, timelines, and candidate availability.

SEE HOW TSP WORKS DIFFERENTLY FROM OTHER HIRING AGENCIES

TSP is a refreshing alternative to other recruitment agencies. We're an Inc. 5000 company, part of the Dallas 100, an Entrepreneur Best Ranked Company, and have also received the Outstanding Latino Business Award. Every employee we place works on a W2 and receives benefits because we focus on offering extraordinary service, putting people first, and tailoring custom solutions for our clients.

We've achieved so much due to our vision and methodology. TSP believes employees perform at their best when they feel empowered, motivated, and valued. We treat each jobseeker as a person capable of thriving, creating a positive ripple effect on the employee and the business that hires them.

At TSP, we foster professional growth, job satisfaction, and skill development, and we fully know how daunting the job search is. We offer personalized career guidance and work to prioritize the human side of staffing. By putting people first, we can find the best staff and connect jobseekers to companies that will value them.